Civil Aviation Authority: A report of an inquiry into the supply of navigation and air traffic control services to civil aircraft

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Summary

On 12 December 1989 the Secretary of State for Trade and Industry referred to the Commission certain questions concerning the efficiency and costs of, and the service provided by, the Civil Aviation Authority (CAA) in supplying navigation and air traffic control (ATC) services to civil aircraft (the relevant services). The services provided to military aircraft and the Authority's extensive regulatory activities were excluded from our inquiry. The terms of reference are set out in Appendix 1.1.

We discuss here the main issues arising from the reference. A summary of our recommendations appears at the end of the report in Chapter 10.

It is seven years since we delivered our first report on the relevant services. This time, we have more limited terms of reference. As we mention in Chapter 9, the result has been that certain of the remedies proposed in the 1983 report concern matters which have fallen outside the main thrust of the current inquiry. This applies particularly to the structure of charges and the allocation of costs to services provided for non-National Air Traffic Services (NATS) airports.

We are asked first of all in the terms of reference whether, and to what extent, the CAA has implemented the recommendations in the 1983 report. We show in Chapter 9 that all but one of the recommendations, or remedies as they were described in that report, have now been accepted and have either been implemented or are in the process of implementation. It is disappointing that a number of them were initially rejected by the CAA's management or not acted upon with sufficient direction or vigour. This has turned out to be particularly significant in the area of manpower planning.

In this report we must be concerned with the performance of the CAA's present management. We have observed the beginnings of a clear change with the appointment of the present Chairman in 1986, followed by a series of senior appointments from outside the CAA. The Chairman told us that it was his intention to change the culture from one that was narrow and technically driven to one with wider managerial perspectives and skills, more in tune with the levels of service and cost expected by users. New appointments from the private sector to the Board and at senior executive levels of the organisation aimed to blend the best practice from the private sector with the ethos of service derived from the public sector. The CAA was reforming working practices, improving the corporate planning process, setting clear objectives for the organisation and for individuals, introducing a measure of performance-related pay, transforming the scale and conduct of the investment programme and making the organisation more accountable to users. At the same time safety remained the CAA's over-riding aim.

In considering how successful the CAA has been in achieving its aims for the relevant services, we discuss first the remaining specific questions in the terms of reference. These are concerned with the extent to which the CAA has adequate systems and procedures for planning and implementing the supply of such services with proper efficiency.
Planning arrangements

We found that the CAA's corporate planning procedures were based on sound management principles but still awaited full implementation. In particular, priority base budgeting (PBB) was only now being comprehensively introduced and manpower projections were derived without the benefit of an effective manpower planning system. We have made a number of recommendations aimed at improving the corporate planning process. Most importantly, we have recommended that it should be used as a vehicle for illustrating trends in cost effectiveness, safety and service quality, and for demonstrating the influence of capital investment on costs. A sound framework for the future has been established but we have noted that more development and refinement of NATS strategy planning are required.

Manpower planning has not been satisfactory. We concluded in the 1983 report that there was scope for improving the efficient use of the NATS workforce. We recommended that the CAA should collect and analyse data relevant to existing manpower arrangements and seek better utilisation of manpower. As indicated in Chapter 8, this was misinterpreted as a signal to reduce the numbers of Air Traffic Control Officers (ATCOs). We have noted that the CAA has not yet been able to establish an effective computerised personnel database and, as a result, the collection and analysis of data has been difficult and manpower planning has been impaired. We have made recommendations to remedy this unsatisfactory situation, which has contributed to the CAA's failure fully to anticipate its need for increasing numbers of ATCOs in the late 1980s, a need which will continue at least into the middle of the current decade and exacerbate the CAA's problems in providing sufficient capacity to meet demand for aircraft movements.

Management of investment

The CAA has well-established procedures for the regular preparation of medium and long-term forecasts of air traffic. We have made a number of recommendations designed to improve this input to its planning and investment processes. We were generally satisfied with the CAA's investment appraisal procedures although we noted some variability in their coverage. We have accordingly recommended that its Investment Appraisal Guidebook should be formally incorporated into the procedures for project management and control.

Given the CAA's very extensive capital investment programme for NATS worth around £760 million at out-turn prices and including more than 60 projects over £l million, we looked very closely at its project management systems and organisation. The CAA has had a history of unacceptable delays to projects, cost overruns and failures to perform in accordance with specification. It explained the remedial measures it had been taking and was intending to take. We were encouraged by this and by its bringing in towards the end of our inquiry, on time and within budget, the first of its three major projects: the replacement of the mainframe computers at the London Air Traffic Control Centre (LATCC). The other two major projects, the Central Control Function (CCF) and the New En-Route Centre (NERC), which are together worth some £265 million at out-turn prices, will present greater challenges to the CAA's new systems. We have therefore emphasised the importance of its keeping to its suggested time-scale for further improvements to project management over the period June 1990 to December 1992.

Identifying and implementing improvements in efficiency

The direction and control of the CAA's drive to improve its efficiency was significantly improved by the introduction in 1988 of PBB and in 1989 of the Directorate of Corporate Control. PBB requires the CAA's managers to define levels of provision of services and the resulting costs and benefits, and to rank services in order of priority for funding. The Directorate of Corporate Control includes the CAA's Efficiency Unit which, at the request of the Managing Director, carries out reviews of PBB proposals; its reports are submitted to the Audit Committee. Other activities of the Directorate include internal audit, and operational management information and controls. Taken together, we have concluded that PBB and the Directorate provide adequate means of identifying and implementing improvements in the efficiency with which the relevant services are supplied. They are reinforced by the personal objectives now given to the Chairman, Managing Director and all Group Directors of the CAA. These objectives are reassessed each year and a large number of them are concerned with improving efficiency. We have noted in Chapter 4 the need for the CAA to identify further potential for improvements in ATC by developing additional performance indicators.

Certain other matters to which we attach considerable importance arose in the course of our inquiry.

The relationship between the CAA and NATS

It was represented to us by some users that the provision of air traffic services by NATS should be separated from the regulatory functions of the CAA. We have carefully reviewed the arguments for and against this proposition in Chapter 6. We share some of the concerns that have been put to us but we are particularly mindful of the possible disruptive effect of separation at a time when NATS has to implement a large and essential investment programme. We have recommended that the question of separating NATS from the CAA should be reviewed in 1996, by which time the two major projects referred to in paragraph 10.10 are scheduled to be completed and the impact of recent management changes will have been shown. The CAA itself suggested that successfully carrying through its current investment programme by the mid-1990s, while maintaining current levels of safety and service, would be a good test of the structure of the organisation.

Transparency of charges

We received much complaint about the lack of transparency and recent steep increases in the CAA's charges. We have recommended that the CAA should provide users of its services with a detailed breakdown of its charges into individual cost components and give specific reasons for increases.

Industrial relations

We have noted some improvement in industrial relations between the CAA and the trade unions in recent months but there is still a great deal of mutual suspicion and lack of trust. Good industrial relations are of prime importance in the provision of air traffic services. The CAA and the trade unions are to be congratulated on the absence of disruptive disputes which have been all too common in continental Europe in recent times but there is clearly room for improvement in the management/unions relationship. We believe that establishing a sound relationship will depend ultimately on management's developing a clear industrial relations strategy and we have made a number of recommendations to assist in this endeavour.

The European dimension

The interdependence of United Kingdom and continental European air traffic services emerged very clearly in the course of our inquiry, not least during our visit to Eurocontrol in Brussels. Delivery of delay-free air traffic services is not within the gift of the CAA alone, whatever the level of its investment. Much of the delay experienced by United Kingdom users originates overseas, particularly in continental Europe, and the situation is worsening year by year. We were therefore particularly glad to note the significant contribution the CAA has made to moves towards harmonisation of air traffic services in Europe, as a practical step towards eventual integration. In order to strengthen the CAA's efforts in this area we have recommended that one senior person should be appointed to co-ordinate the various links with those European agencies concerned with air traffic services.

Priorities for action

In the conclusions to each chapter of the report we make a number recommendations which are summarised in Chapter 10. There are four matters which we believe should have priority:

(a) the implementation of effective corporate manpower planning, in particular to address the shortage of ATCOs;

(b) the use of corporate planning to illustrate trends in performance;

(c) implementation of improvements in project management to the CAA's suggested time-scale; and

(d) greater transparency in and explanation of charges.

The recommendations which require particular attention in these areas have been set out in bold type in Chapter 10.

The public interest

We recognise the CAA's achievements in maintaining its excellent safety record in the face of the marked growth of air traffic in recent years, particularly in the already congested London Terminal Control Area (LTMA). To some extent it has fallen behind in the provision of the most advanced ATC equipment and it has been slow to get to grips with many of the recommendations in our 1983 report. We have already noted, however, that there has been a change in the CAA's management and that an extensive investment programme is under way. The CAA's record of project control has been poor in the past but the first of three major new projects has recently been successfully implemented on time and within budget.

In the light of all the evidence we have considered, we conclude that the CAA is not, in relation to any matter falling within our terms of reference, pursuing a course of conduct which operates against the public interest.

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